Governance Problems at Royal Dutch/Shell

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Though the merger proposal was lauded by the investors and many corporate governance experts, a few analysts did express doubts about the success of the merger. They felt that the merger proposals might not have far-reaching benefits because they thought that there did not seem to be any major structural changes planned that would open up the nomination and election process for independent board seats. Also, the equity distribution, the share-exchange ratios, dividend distribution and tax implications in the new company were considered very complex for common shareholders to understand.

Analysts felt that the single board was not going to be a panacea for all the cultural clashes between the Dutch and the English managers, because the single board was again going to comprise the bi-national directors.

How the differences in their operational styles were going to be resolved was not made clear. Analysts commented that good governance meant competence and a management team that would abide by corporate ethics; whether it was a uni-structure or twin structure organization was immaterial.

They felt that the twin-board system had worked well for nearly a century and, therefore, there was no point in blaming the company's twin-board structure for company's governance problems.

Therefore, analysts commented that the merger proposal was just a public relations gesture of the management to appease disgruntled investors and in reality, the introduction of a unified board might not achieve any major benefits...